Economic Snapshot | Economic Growth

Minorities, less-educated workers see staggering rates of underemployment

This week’s Economic Snapshot spotlights two of the trends that can be examined in more depth in EPI’s new online resource,  Economy Track, which features more data on underemployment by race and level of education.

By Kathryn Edwards

One sign of the severity of the economic downturn that is not captured in official unemployment data is the underemployment rate, an indicator that measures the broad group of people who have been unable to find full-time work and are either working part-time or not at all. While the current nationwide unemployment rate is 9.8%, the underemployment rate is 17%, meaning that more than 26.5 million people – about one in six workers – cannot find the amount of work they want.  The underemployment figure encompasses three groups of workers: the unemployed;  involuntarily part-time workers who want full-time work but have had to settle for part-time hours; and workers described as  “marginally attached,” who want and are available for a job, but have given up actively looking. The ranks of the marginally attached typically increase during economic downturns as slim job prospects lead more of the unemployed to give up looking.

As the first chart shows, the underemployment rate is 25.1% for Hispanic workers and 23.8% for black workers, compared with 14.2% for white workers. Underemployment is not only significantly higher among minority groups, but has seen larger increases, indicating how the existing disparities within the labor market have become more pronounced over the course of the recession. Since the start of the recession in December 2007, underemployment has increased 9.3 percentage points for black workers and 14 percentage points for Hispanic workers, compared to 7.1 percentage points for white workers. 

The next chart shows a similar pattern of widening disparities between higher- and lower-educated workers. The underemployment rate of 8.6% for workers with college degrees is not only significantly lower than for less educated workers, it has also increased by a comparatively small 4.4 percentage points since the recession began. On the other end of the spectrum, the underemployment rate for workers with less than a high school degree has risen from already high 19.2% in December of 2007 to 32.8% today.  This widespread inability to find full-time work affects workers in many ways beyond depressed wages and income levels. Workers who cannot find full-time work are less likely to have health insurance, access to a retirement savings plan, and many of the other benefits commonly associated with full-time work.